The Federal Reserve announced its preliminary results of 2023 financial statements, finding that the central bank ran an operating loss of $114.3 billion.
The number is the largest the Federal Reserve has ever posted.
According to The Wall Street Journal, the number is due to increased interest rates to combat inflation.
“The central bank paid more to financial institutions on interest-bearing deposits and securities than it earned from securities that it bought when interest rates were lower,” the WSJ reported. “That’s a result of it raising its benchmark short-term interest rate to a two-decade high, above 5%, last year.”
Because the Fed does not ask Congress to cover its debts, its losses are considered “deferred assets,” meaning that it owes the U.S. Treasury.
Its deferred assets grew by $116.4 billion last year, bringing its total to $133 billion, WSJ noted.
American Faith reported in November that Federal Reserve officials voted to leave its benchmark interest rate unchanged at a range of 5.25%-5.50%.
“Recent indicators suggest that economic activity expanded at a strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation remains elevated,” the Federal Reserve said in a statement.
“The U.S. banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.”
The statement explained that the Committee “seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy.”